Chapter 12 Agreement Flashcards
Objective theory of contracts
A party’s words and conduct are held to mean whatever a reasonable person in the offeree’s position would think they meant
Preliminary negotiations
A request or invitation to negotiate
- Example of lacking intent
Agreements to agree
Agreements to agree to the material terms of a contract at some future date
- Modern view: this can be considered as enforceable if there’s intent
Preliminary agreements
- Increasingly seen as enforceable if agreed on all essential terms and no disputed issues remain to be resolved
Revocation
A type of termination of offer by the parties
- Effective when the offeree receives it
Option contracts
When an offeror promises to hold an offer open for a specified period of time in return for a payment given by the offeree
- Example of an irrevocable offer
Counteroffer
A rejection of the original offer and the simultaneous making of a new offer
Lapse of time
When the period specified in the contract has passed
- If not specified → reasonable time period
Destruction
- Notice of destruction of the subject is not required for termination
Death
- Unless when the offer is irrevocable, can be passed
- Revocable offer is personal, cannot be passed
Supervening illegality
A statute or court decision that makes an offer illegal automatically terminates the offer
- Lee offers to lend Kim $10,000 at an annual interest rate of 15 percent. Before Kim can accept the offer, a law is enacted that prohibits interest rates higher than 8 percent. Lee’s offer is automatically terminated.
- If accepted → statute → contract is formed but unenforceable
Acceptance
A voluntary act by the offeree that shows assent (agreement) to the terms of an offer
Offeror
Who makes the offer
Offeree
Who responds to the offer
Mirror image rule
The offeree’s acceptance should match the offeror’s offer exactly
- Any change is considered a new counteroffer
